What role we expect the major oil and gas companies to play in this day and age?
Any discussion on climate change is incomplete without the discussion of the oil majors that are right in the center of the issue. The oil majors have mostly been criticized for the externalities the industry has produced over the course of time and the lack of recognition the oil majors have given to the issue. In addition, any change in regulations related to climate change directly affects the business assumptions of these companies.
Sustainability is most definitely of primary concern and it is widely accepted that global warming caused by the GHG is likely to have severe consequences if left unchecked. However, in such discussion we must keep certain perspectives in mind. The average per capita energy consumption of US (2013) is 6916 KOE; versus average per capita energy consumption of India (i.e, 1/6 of world population) is 606 KOE. To add to this, per capita consumption of energy in India is greater than atleast ~30 countries (data for ~80 countries is not available) . Considering Energy consumption per capita is a fair reflection of general standard of living, it should thus not be surprising that 17% of world population is living without any electricity and 38% without gas connection . This provides the background of the energy requirement in the world. It also reflects the lack of affordability for basic needs for a significant population and thus how crucial it is for energy to be affordable if we hope to improve the living standard of a vast majority of the population. Off the 2015 world energy consumption, 86% was met by non-renewables: oil (32.9%), gas (23.8%) and coal (29.2%) .
Thus, these major oil and gas companies play a role in this world that needs to be celebrated.
Can they do more? Absolutely.
A few things BP is actively engaged in support of reduction in manifestation of climate change are described below:
A significant control in the greenhouse gas emission reduction can be achieved by changing the mix of non-renewables (one of the stabilization wedges presented by CMI). BP is playing a leading role in this direction. BP has been making huge investments globally in natural gas fields exploration and production. In addition to US, BP is engaged in gas field development in Egypt, in Oman and another mega-project that will create a new source of gas supply for Europe. “This is a $45 billion investment that is developing a natural gas field beneath the Caspian which is the size of Manhattan – and building a pipeline network that will run for 3,500km from Azerbaijan, across Georgia, Turkey, Greece and Albania and then under the Adriatic and into southern Italy” .
In addition, BP has been a proponent of carbon pricing system to the extent of its processes and uses carbon price of $40 per tonne to evaluate business .
Few other items BP is working on to reduce the carbon footprint is developing renewable energy resources and improving efficiency. In the renewables space, BP is investing in biomass and wind energy projects in Texas . Some efficiency improvements have been made in its own E&P and downstream business and also end product (machine lubricants) to improve subsequent machine efficiencies. While there is lot of scope to build upon these initiatives; I think the most important role BP, and all the other major oil and gas players can play is in education and give unbiased support to scientific research and findings. “One of BP’s main academic partnerships in this area is the Carbon Mitigation Initiative (CMI). This is a 15-year partnership between Princeton University and BP that brings together some of the world’s leading scientists to advance climate science and explore potential low-carbon energy solutions “. As important is the role the company plays in meeting energy demand of the world; equally valuable will be facilitating search for solutions to be able to achieve an optimal solution for today and tomorrow.
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